Nifty dives below 5300...Sensex sheds 1.5% on election anxiety

The frontline Indian stock indices ended Monday with sharp losses, starting off the truncated week on a sore note. Traders preferred to stay light by booking more profits ahead of the outcome of the five assembly elections. The results of the votes will be announced on Tuesday. There are concerns that a disappointing performance by the Congress party could force the Centre to put economic reforms on the back-burner.

Another dampener is that crude oil prices continue to be uncomfortably high for the past few days. As if that is not enough there are reports of an impending fuel price hike post the state elections. This may lift inflation again and prompt the RBI to postpone its rate cuts.

Finally, the Sensex ended at 17,359, down 277 points or 1.5% from the last close. It earlier touched a day's high of 17,598 and day's low of 17,312.



The Nifty settled at 5,280, down 79 points or 1.4%. It hit a day’s high of 5,344 and day’s low of 5,266.

Among the BSE sectoral indices, the Realty index on BSE was once again the biggest loser, down 3.2%. It was followed by BSE Metal index, down 3%, while BSE Capital Goods and Banking index fell 2.5% each.

Only the BSE FMCG index bucked the negative trend, adding up 0.3%.

The broader markets ended with losses as well, with the BSE Mid-Cap index down 1.4% and the BSE Small-Cap index down 1%.

Notable gainers on the Sensex were Tata Motors, Wipro, ITC, ONGC, Hindustan Unilever and Cipla.

On the other hand, Hindalco, DLF, BHEL, Gail, ICICI Bank, Jindal Steel and Hero Motocorp were the notable losers on the Sensex.

The Indian VIX ended at 28.92; the index rose by 2.6% today. It hit an intra-day high of 29.55 and an intra-day low of 28.20.

Sustained offloading was seen not only in the domestic equity markets but also across global markets today. Asian markets ended mostly lower today amid worries about slowdown in China. Chinese Premier Wen Jiabao lowered the nation's economic growth target to 7.5%, the least since 2004.

The Shanghai Composite index was down 0.6%. The Nikkei index in Japan was down 0.8%, the Hang Seng index in Hong Kong was down 1.3%. Taiwan’s Taiex dropped 1.4% while South Korea’s Kospi was down 0.9%.

The European markets were also under pressure today after the Markit eurozone composite purchasing managers index (PMI) fell to 49.3 in February from 50.4 in January, coming in below an earlier, preliminary estimate of 49.7.

Germany's composite PMI rose to a two-month high of 53.2 in February. Italy's PMI dropped to 44.7, while Spain dropped to 42.9 - both figures are two-month lows.
The DAX index in Germany was down 1.1%, while the FTSE index in the UK was down 0.5% and the CAC index in France traded lower by 0.8%.

Growing tension between Iran and the US also prompted investor caution today. US President Barack Obama said on Sunday that he hasn’t ruled out any options in dealing with Iran.

Russia’s main stock market traded higher after Vladimir Putin swept to a landslide victory in the country’s presidential elections.

Russia’s RTS stock index was choppy, but mostly higher. It last traded higher by 1.5% at 1,734.

Shares of ONGC ended with modest gains. The stock rose 1% to close at 284. The Life Insurance Corporation of India Ltd. (LIC) increased its stake in the company to 9.475% from 5.1% earlier.

LIC bought 377.1mn shares in last week's auction where the Government got bids for 420.3mn ONGC shares out of the 427.8mn offered. The Government, which offered a 5% stake in ONGC through a share auction on March 1, raised US$2.57bn after selling just 98.3% of the shares on offer.

Stocks of sugar companies Bajaj Hindusthan and Balrampur Chini Mills rose earlier on hopes that the Samajwadi Party would beat rival Bahujan Samaj Party in the UP state elections, as suggested by voter surveys, reports said. The results of the elections would be declared on Tuesday.

Bajaj Hindusthan ended at Rs36.25, up 3.1% over the previous close. It had touched a day’s high of Rs37 and a day’s low of Rs35. The total traded quantity stood at 77.2 lakh shares on the NSE.

Balrampur Chini Mills, after rising earlier, gave up its gains in a weak market. It ended at Rs54, down 1.1% over the previous close. It had touched a day’s high of Rs57 and a day’s low of Rs53.15. The total traded quantity stood at 45.59 lakh shares on the NSE.

In the currency market, the rupee declined to a one month low versus the US dollar on Monday as importers stepped up their demand for the greenback and domestic stocks extended recent losses.

The Indian rupee was last trading at 49.83 per dollar after touching a day's high of 49.6950 and a day's low of 49.8650. It opened at 49.74 as against the previous close of 49.50.

The rupee, which had lost ~16% against the dollar in 2011, has rebounded by over 6.5% so far this year, primarily due to the strong FII inflows into Indian shares and debt.